Copper breaks above USD11,000 on increased likelihood of US rate cut

LONDON: Copper prices rose to their highest in almost a month on Wednesday on growing expectations that the US Federal Reserve will cut interest rates in December and that prices will rise further after outflows to US stocks.

Benchmark three-month copper on the London Metal Exchange was up 1.3percent at USD10,963 a metric ton in official open-outcry trading after hitting USD11,025 for its highest since October 30. The metal used in power and construction hit a record high of USD11,200 on October 29, boosted by worries over tighter copper supply from the Grasberg mine in Indonesia this year and next.

“Upside risks for copper are rising, with the balance tightening into 2026 amid supply challenges, low inventories and ongoing trade distortions,” said ING commodities strategist Ewa Manthey.

The market found fresh support from data on Tuesday showing that US retail sales rose less than expected and consumer confidence weakened, firming expectations that the Fed will cut rates soon. Lower interest rates support demand prospects for growth-dependent metals.

The global copper cathode market faces a surplus of between 350,000 tons and 400,000 tons this year, but there is a deficit of 500,000 tons of copper concentrate that will continue next year, said Nicholas Snowdon, head of metals research at trader Mercuria.

Snowdon, a high-profile copper bull, said that LME copper prices would need to rise to pull metal back to global markets from the United States, which now holds 70percent of global copper cathode inventory. That could rise to 90percent in the first quarter of 2026, Snowdon estimates.

Copper stocks in LME-registered warehouses are down 42percent this year after massive outflows to Comex copper stocks. Among other LME metals, aluminium rose 1.7percent to USD2,848 a ton in official activity, zinc added 1.2 percent to USD3,030, lead gained 0.2 percent to USD1,984.5 and nickel dipped by 0.2 percent to USD14,850. Tin was up 0.7percent at USD37,800 after hitting USD37,880 for its highest since April 2.